Japan's Foreign Direct Investment

In: The annals of the American Academy of Political and Social Science, Volume 513, Issue 1, p. 48-61

Abstract

Japan's foreign direct investment (FDI) began in the early 1950s but was conducted only on a small scale until the beginning of the 1970s. Until the 1970s, Japan's FDI was mainly in the mining sector for resource development, the commercial sector, and the labor-intensive manufacturing sector, directed toward developing countries. With the 1980s came deregulation of the financial sector as well as increased import barriers by major countries in North America and Western Europe, leading to an unprecedented increase in Japan's FDI in the finance and manufacturing sectors of these countries. The latter half of the 1980s was another period of a sharp increase in Japan's FDI, resulting from the large appreciation of the yen. Japan emerged as one of the top investor countries of the world. Except for resource development, government policies have neither restrained nor promoted FDI directly but have instead aimed at creating a generally favorable business environment in which FDI could be conducted.